Drawing-Sword issues with animation
I read that, in the game engine, Child of is partially supported- you can parent to objects but not to bones.

Add an empty to the character's hand bone and also have another at the hip where the sword rests when sheathed, parented to the hip bone.

Then you could try parenting the sword armature (using child of constraint) to the empty. You could also try with the sword object itself, without the sword's armature.